Police on the 3rd referred HYBE (352820) Chairman Bang Si-hyuk and other executives to prosecutors over allegations that they deceived shareholders into selling their stakes during the company's initial public offering process, reaping about 263.1 billion won in illicit gains. Analysts expect further supplementary investigation to be unavoidable, however, as differences in legal interpretation between police and prosecutors — exposed during two rounds of arrest warrant requests — remain unresolved.
The Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency's Metropolitan Investigation Bureau referred Bang and four other HYBE executives to prosecutors without detention on charges of fraudulent unfair trading under the Capital Markets Act. The referral comes about 21 months after police opened a preliminary inquiry in December 2024.
Police believe Bang and others told existing shareholders that HYBE had no listing plans while pushing ahead with the IPO, prompting them to sell their stakes to private equity funds. The private equity funds, meanwhile, were found to have recruited investors by guaranteeing a listing and returns.
Police concluded that Bang and others gained about 263.1 billion won in illicit profits through the process and obtained a court decision to preserve the full amount for forfeiture. Bang's share of the gains is reported to be in the range of 150 billion won. Police determined that Bang led the scheme, staying in close contact with the private equity funds from the early stages of listing preparations.
At issue is the gap between police and prosecutors over which charge applies. Police viewed the case as an organized financial and securities crime that undermined fairness in the capital market and applied the fraudulent unfair trading charge. Prosecutors, by contrast, are said to see the case as closer to fraud that harmed the property interests of individual investors rather than a broader public interest.
When prosecutors rejected the arrest warrant request for Bang in April, they reportedly said additional substantiation was needed on harm to public interests such as fairness in the capital market. Police, however, referred the case while maintaining the fraudulent unfair trading charge. As a result, prosecutors could ask police to conduct a supplementary investigation after reviewing the referral records and evidence.
Bang's legal team said in a statement released the same day that it had "consistently made its case based on objective materials and evidence," adding that it "expects the allegations to be resolved transparently through the proceedings ahead."
